International Business Ethics

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Transcript of International Business Ethics

Matt FraherVioleta VolkuteTamara Dryden Business Ethics Presentation PRIMARK: THE REAL PRICE OF MORALITY TNS KNITWEAR- Manchester based supply chain Illegal Immigrants in UK stores Ethics:Developing vs. developed countries STANDARDS OF LIVING:Typically lower Main focus on primary and secondary sectors WORKING IN RETAIL:Competition vs. Profits? Retail: extremely competitive 60% of all business are sourced to Primark 20,000 garments/ week Breaches to both immigration and employment laws IMMIGRATION:"Right to work" documentsIllegal status in United Kingdom EMPLOYMENT:£3/ hr in contrast to £5.73 Cash in hand paymentsHealth and safety breaches TNS KNITWEAR COMPANY -Private company established 2008-No. employees: 40 Traditionally, local sourcing in the UK is less profitable Not only able to compete but bettered Chinese and Indian deals 2 week delivery time "How can you sell a T-shirt for £2 and pay the rent, and pay the rates, and pay the buyer and pay the poor boy or girl who is making it at a living wage? You can't." 1. Threat of new entrants 2. Availability of substitutes 3. Size of market PRIMARK'S NICHE Cheap prices for "hot off the catwalk" garments 16% (July 2012) increase despite recessionKeeping price down means cuts are made elsewhere along the supply chain PROBLEMS? £700 -Chanel£6 -Primark Michael Kors Wetsuit Dress £1197 -Michael Kors£17 -Primark Chanel Clutch Bag Prabal Gurung Floral Dress £1100 -Prabal Gurung£17 -Primark POPULATION:Higher birth rates ENVIRONMENTAL:Lax ethical standardsRigid bureaucracy Weak enforcement mechanisms For Primark, acting ethically means: Utilitarianism Primark’s Code of Conduct Jeremy BenthamJohn Stuart Mill "Actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness" STAKEHOLDERS IMMIGRANTS POLITICAL Increased profits marginsCheaper sourcing Company reputation Possible legal issues Permits stay in the UKSource of income Working conditions Exploitation Possible support for political campaigns Drain to community: welfare benefits Public dissatisfaction: jobs • taking care of its people• being a good neighbour• respecting human rights• engaging with its stakeholders. The code states that within its supply chain:1. Employment is freely chosen2. Freedom of association and the right to collective bargaining are respected3. Working conditions are safe and hygienic 4. Environmental requirements - Primark shares its commitment with suppliers 5. Child labour shall not be used 6. Living wages are paid 7. Working hours are not excessive 8. No discrimination is practised 9. Regular employment is provided 10. No harsh or inhumane treatment is allowed 11 Legal requirements - Primark is commited to compliance of all countries’ laws. Core values •To offer the best value for money•To improve continuously our range of products•To treat customers as we want to be treated ourselves•To strive continuously for effectiveness•To respect each other•Ethical approaches to employment and trading•Environment, health and safety Primark can offer value for money by: • sourcing products efficiently• making clothes with simpler designs• using local fabrics and trims• focusing on the most popular sizes• buying in volume• not spending heavily on advertising. First Primark store was opened in 1969 in Dublin and was called Penneys1973 expansion to Great BritainTotal number of stores now:253 During the 2010/2011 Primark's revenue rose from £2.73 billion to £3.04 billion The largest Primark store is located on Market Street, Manchester, England occupying 100,000 sq ft (9,300 m2) of retail space, spread over three floorsPrimark has over 600 major suppliers in 16 countries. These companies provide employment for over 700,000 workers Introduction What are business ethics? Business ethics are rules of conduct and principles and patterns of behavior in business dealings that involve ‘doing the right thing’. Primark is very clear about where it stands on business ethics. ‘As an international brand with a global supply chain we have a responsibility to act ethically. We embrace this responsibility as an opportunity to be a great force for good.Primark is committed to providing the best possible value for our customers, but not at the expense of the people who make our products.’ Primark works to ensure ethical sourcing in a number of ways: It has an Ethical Trade DirectorPrimark is a member of the Ethical Trading InitiativePrimark bases its Code of conduct on the International Labour Organization’s (ILO) Code. Primark forced into out-of-court settlement after ANOTHER 'insulting' design plagiarism By Daily Mail ReporterUPDATED:16:33 GMT, 11 February 2011 Primark 60 pence labour disgrace By Daily Mail Reporter Last updated at 11:10 AM on 23rd June 2008 Primark now Britain's second biggest clothes store, thanks to rise in disposable fashion 22/04/2008 22:17:29 Primark become UK's second biggest clothes store By DAILY MAIL REPORTER All By This Author - 22/04/2008 14:17:53 The battle of Primark: 3,000 customers force their way into new store 05/04/2007 20:05:25 Cheap and cheerful: Primark powers through bad times with 20% sales rise By RUPERT STEINER All By This Author - 09/07/2009 22:52:51 Consumerism The gap in our economy is between what we have and what we think we ought to have -and that is a moral problem, not an economic one.

~Paul Heyne The Primark effect: Throwaway fashion Can it be justified? origin of manufacture Fair trade production The battle of Primark: 3,000 customers force their way into new store Libertarianism Cyrenaic hedonism Virtue ethics Aristotle wrote in his Nicomachean Ethics: “The many, the most vulgar, would seem to conceive of the good and happiness as pleasure, and hence they also like the life of gratification. Here they appear completely slavish, since the life they decide on is a life for grazing animals”(Aristotle). "Eat, drink and be merry, for tomorrow we die." (Aristippus of Cyrene) References Livingston, J (2011) Against Thrift: Why Consumer Culture is Good for the Economy, the Environment, and Your Soul "It's Black Friday, Spend Spend Spend"(James Livingstone) Aristotle (1999). Nicomachean Ethics. 2nd ed. Translated by Terence Irwin.Indianapolis: Hackett Press. Boettke, P J.Heyne, P. and Prychitko, D (2009) The Economic Way of Thinking BOOKS WEB SOURCES www.dailymail.co.uk/primark [ accessed November 2012] www.ethicalcorp.com/communications-reporting/primark-–-cheap-and-cheerful-ethical-cost [ Accessed November 2012]